Inventory is an important asset of a firm and its management should be accurate, proactive, and efficient. Holding too little or too much inventory is a burden on profitability and productivity, still, it is highly important for many businesses to hold a sufficient quantity of inventory all the time.  The main objective to hold inventory is to meet customer targets without compromising cash flow. Inventory managers refine their supply chain operations to achieve optimum stock levels. Inventory management is a vital topic for students who study Accounting and therefore students face a difficulty writing assignments on this topic look for accounting assignment help from BookMyEssay.

Costs to Hold Stock

To manage stock successfully, businesses should find a balance between the advantages of holding stock and its costs. The costs to hold stock include money used to buy the stock along with insurance and storage. It is important to consider that having excessive stock is an additional expense and it can result in the shortfall of cash flow. On the other hand, having little stock is lost income because it lost sales. So, it is very crucial for a business to hold the optimum inventory level all the time. These are discussed in our assignment writing help on Accounting subject.

The Advantages of Holding Inventory

Customer Satisfaction

While comparing holding more inventory and running out of stock, stock-outs are worse. When customers want goods from you and you do not have stocks then you lose your customers to your competitors. Holding additional inventory in a storage area or in a distribution center can keep your shelves completely stocked during the peak customer demand.

Price Discounts

One reason why sellers carry additional inventory is due to the cost advantages of purchasing in bulk. When you order huge product lots, the cost per unit is less. The strategy improves the gross profit as a lower cost of sales indicates more money on every sale. When you function as a low-cost seller, you can pass these discounts to the customers and enhance your sales volume.

Handles uncertainty

Companies might hold inventory to handle uncertainties. This inventory is known as “buffer inventory.” The external factors that affect demand and supply cannot be always anticipated by companies. Companies that have a huge amount of inventory are able to handle unexpected customer demand. Some companies might handle suppliers’ mishaps that fail to deliver inventory timely.

Protection against delays

Holding inventory provides you greater control. You might have strong partnerships with your suppliers but you cannot control the efficiency through which they shall ship the goods. Delays to replenish orders may contribute to low supplies or stock-outs when customers want their products the most. All the advantages of holding inventory are discussed in our Accounting Assignment Help.

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